A CARNIVAL AND A CHURCH: I spent 3 days in Omaha chasing Warren Buffett but found something else

It's amazing that Warren Buffett is alive. Not because he's 84,
or because he appears in poor health. In fact it's the opposite:
Buffett is chipper and more alert and energized than I am over
the course of
Berkshire Hathaway's seven-hour annual meeting.

No, it's amazing that Buffett is alive because we are all here.

Forty-thousand shareholders,* journalists, students, world
travelers, and disciples have traveled across the country and
from around the world to be in Omaha, Nebraska, very nearly the
geographical center of the US, to listen to Buffett speak, to see
Buffett sit in a chair on a stage inside an 18,000-seat arena and
answer questions about his company, his life, his failures, his
successes, and more.

The event is a celebration and a coronation, something Buffett
surely never imagined would exist when his Buffett Partners
investment fund took control of Berkshire Hathaway, a failing
textile manufacturer in Massachusetts, 50 years ago. It's
something that I'd wager Buffett himself finds strange.

You hear over and over through the weekend that this event isn't
like other shareholder meetings, which is both an obvious and a
profound point. Most shareholder meetings are sparsely attended,
held in hotel ballrooms or even more modest spaces, and a few
major shareholders and a few minor shareholders who air
grievances with management are generally the only attendees.

And so not only is total attendance at Berkshire's meeting
multiples of what you'd find at any other company's, but the tone
is not one of aggression or displeasure but fawning and
deference. And all of this is to say nothing about the shopping
event that happens adjacent to the meeting itself. It is a
celebration and a party and a spiritual event.

During the seven-hour meeting, not all questions fielded by
Buffett and his vice chairman, Charlie Munger — or Warren and
Charlie as so many shareholders take to calling them — are
softballs. Buffett and Munger are asked about Berkshire's Clayton
Homes unit, which was recently the subject of a
detailed and unfavorable report from The Seattle Times.

Buffett more or less dismisses the article’s criticisms, citing
what he called bad math by the reporter while touting the quality
of a Clayton Homes unit and the relatively modest net profits
seen by Clayton — and, by extension, Berkshire — after building
and financing is complete.

This is the first question Buffett takes, and the subject isn't
broached again.

Buffett is asked about 3G Capital, the private-equity firm
Berkshire has worked with on deals including its recent takeovers
of Heinz and Kraft Foods, and a firm that has been as aggressive
as any in "right-sizing" (business jargon for firing a bunch of
people) a business after taking it over.

"I'd never run a business employing more people than I had to,"
Buffett says, adding that he'd never expect one of his partners
to do the same.

On my flight out of Omaha, a portfolio manager from London told
me he was struck by how much of a shrewd capitalist there was
under the disarming and grandfatherly nature of Buffett.

And this, perhaps, is what the weekend, the experience comes down
to: It all seems like one thing, but it is in fact another.

Arriving in Omaha

The crowd to get into the
Berkshire annual meeting.Myles
Udland/Business Insider

Everyone here is a student. Or at least wants to be.

Warren and Charlie are asked for five pieces of advice on how
they might identify a company that will have strong earnings
power in 10 years. They are asked how to network with powerful
business leaders if you don't have high-ranking business-school
credentials. They are asked to identify and then answer a
question they've never been asked before.

Shareholders ask of them the almost impossible, but if you've
built a conglomerate that holds an annual meeting attended by
40,000 people, it almost seems fair to ask this much of them.

In three days I met or overheard people from all over the world:
a banker from Dubai, an IT consultant from London, a
seed-industry worker from Manning, Iowa, a retired Commerce
Department employee from outside Pittsburgh, a football player at
Notre Dame, a retired couple from North Carolina preparing to
travel to Shanghai.

Some of these people are here to celebrate their wealth. Some are
here to celebrate Warren and Charlie, to pay respects to people
who have changed their lives in some way or another. But more
than anything else it seems people are here to learn. They are
here to learn explicitly from the words of Warren and Charlie but
also from other shareholders, the other people you meet when you
descend on Omaha during the first week of May.

Across the street from CenturyLink Center, where the whole
meeting and shopping event takes place, is the Omaha Hilton. The
lobby is teeming with Wall Street types wearing suits and no tie,
a sort of portfolio manager's uniform to informally identify as a
"value investor," not merely someone who has profited from buying
Berkshire shares but who, in theory, makes money from employing
these strategies as money managers.

Of course, whether the Buffett approach works, or will work, or
could work, for anyone other than Buffett is unclear. There is,
after all, only one.

In some sense, then, it seems odd on Thursday and Friday that
Buffett will appear, like the Wizard of Oz, on Saturday morning.
He’s called the Oracle of Omaha, a mythical name that would seem
reserved for someone more secretive, less public, than Buffett
really is.

It occurs to me at some point that we, the travelers who have
come to Omaha, are in a major way here chasing a ghost. Except
this ghost is alive.

A carnival and a church

I take pictures of the event as a spectacle, a carnival, an
occasion for people watching that exists beyond the meeting's
stated and official purposes.

I attempt to remain detached and aloof from the event, but I soon
find myself buying Berkshire products to send back to my
colleagues and family in New York with as much enthusiasm as
shareholders from Macau, Germany, Brazil, and Oklahoma.

And yet by Saturday there's a sort of fatigue, a sadness that
settles over the event and me, the entire project in a way. It is
after the meeting's hour lunch break and I'm sitting in the last
row of the arena's upper deck, looking down at Buffett and
Munger, amazed that these men are still sitting there, dutifully
answering questions and providing thoughtful responses. Allowing
folks a chance at another question. When asked something Buffett
or Munger just don't know anything about and as a result decline
to answer.

Myles Udland/Business Insider

I look across the bowl to the seat I initially scored at 7:15 in
the morning, sandwiched between a couple from Omaha and a couple
from Charlotte, the soon-to-be world travelers. They haven't
moved. Or least they have not left their seats for anything other
than a bathroom break or lunch. They are committed to the
meeting.

And so am I of course, at least officially. I've been sent here
to report on what it's like, how it feels, what happens.
And with a little under 24 hours remaining in Omaha, it dawns on
me that I'm not sure I know, or can know, or want to know.

How I get from my goal of chronicling the event to enjoying the
event as an excited first-timer to seeing only the meeting’s
cynical undertones is the question that eventually appears most
pressing to answer. If this event is so happy, why is it making
me so sad?

The arena is dark during the annual meeting. You can't record the
event, or at least you're not supposed to, and before the
Berkshire movie that starts the meeting begins, Buffett makes a
PSA asking shareholders to police other shareholders: See
something? Say something.Someone is recording a video?
Ask them to stop. If they don't, get security.

"We've never had a problem with this," Buffett says in a
prerecorded video, and it doesn't seem as if anyone expects there
to be one now. It's as if the priest has come to the altar and
said, "Please be seated."

It's an amazing thing this cooperation. Shareholders and media
come from around the world, paying thousands of dollars for
flights and hotels, waiting in line from predawn hours, standing,
no bathrooms in sight, just to get a seat that is a few hundred
feet from a stage Warren and Charlie sit on without moving.

It's a room full of reverence and respect and something earnest I
can't seem to fully identify with. I worry that this is because
I'm just a young kid, or because I've come to foolishly believe
that the best way to navigate our "now" is to be coolly detached
and hiply aware of what you are and you aren't, what is and what
isn't, what can and what can't. And what I know is that inside
this framework, this worldview, this surely wrongheaded approach
there exists a complete lack of the word that captures the
zeitgeist of the Berkshire meeting better than any other:
sincerity.

The meeting might seem to be about fun and games, about
celebration, but it is also extremely serious. Buffett and Munger
are old; they will not be around forever. And the prospect of
Berkshire Hathaway remaining the company it is today without
these shepherds around is a scary one.

The topic of succession comes up at the meeting, but it is sort
of brushed aside. Buffett is confident the company's culture will
endure long after he and Munger have passed. Whether one chooses
to believe that or not, the abyss is a scary place to look into,
and with each passing year the company moves closer to that edge.

At one point Buffett says he has pledged to give away 99% of his
wealth because there is no Fortune 400 in heaven. But there is
one on earth, which is where Berkshire will remain after he
passes.

What then? In Warren the shareholders trust.

A Warren Buffett cutout in
front of Borsheim's at the shareholder shopping
event.Myles Udland/Business
Insider

Young people are here to learn; old people are here to laugh

Charlie
Munger.Lane
Hickenbottom/Reuters

On Saturday morning I get in line to enter the meeting at 5:05.
It is not predawn but simply night. I'm standing in front of a
couple from Minnesota, a law professor from LSU by way of
California who has traveled here alone, and a man from Omaha by
way of California who has attended on and off for the past
decade.

"Charlie's the Ed McMahon," the woman from Minnesota says before
the doors open. I am warned that there is something of a comedy
routine on stage.

This does not disappoint.

"It's hard for me to think of many [activist investors] I'd want
to marry into the family," Munger quips at one point. To which
Buffett replies: "I'd better stop before you name names."

Munger goes on and on about what he thinks are the critical flaws
of the eurozone, criticizing the governments of France and
Germany, as well as the euro's problem-child, Greece, during his
tirade. He eventually cuts himself off: "I've probably offended
enough people."

"I think there's a few more in the balcony," Buffett says. The
whole place breaks up.

But behind these quips there is real depth, a lesson that can be
taken away, and like most all of what happens at the meeting, you
only begin to make sense of it when it's over, when you yourself
are moving on.

On marriage, Munger tells the crowd to "look for someone with low
expectations." Everyone laughs, but everyone also maybe knows
it's true. Successful investing, like successful relationships,
is about being able to stomach the bad times in exchange for good
times in the future. All of a business's flaws, like all of a
person's flaws, are on full and vivid display when you're
committed to them.

Buffett and Munger preach buying good businesses and good prices,
not a really cheap but terrible company, and not an amazing
company you have to pay a premium for: good business, good price.

And when you start to run this through how we arrive at the human
relationships we foster and value, Munger's lesson on marriage
starts to make more sense. Aim in the middle, succeed high. Or
something like that.

Outside of comments that have any real analogical depth, Buffett
and Munger's commentary is in itself hilarious.

"If people weren't so stupid, we wouldn't be so rich," Munger
says at one point.

"It's crazy to sweat at night," Buffett says at another point.

"Over financial things," Munger interjects.

Buffett pauses while the crowd chuckles, waiting for the silence
to be broken. "Over financial things."

At one point, a young shareholder asks Buffett and Munger what
sorts of "mental models" they might employ if they were trying to
build Berkshire again. How did they think about building
Berkshire before they built it, in short. Once again, we're all
mostly here to learn.

Of course, the answer is that you don't set out to build a
Berkshire Hathaway; it just happens. Through hard work and
incredible luck you end up at Berkshire Hathaway: Attempting to
build this from the start would lead to certain failure.

This question, and this language ("mental models"), is exactly
the sort of anti-Buffett, anti-Munger thinking that you'd
half-expect to earn this young man admonishment from the stage.
Instead Buffett, who answers all the questions first, waits a
beat longer than he has before answering any other question.

And so we wait.

And wait.

"Charlie?"

The crowd goes wild.

Leaving town

There is something about Omaha that reminds me of downtown
Washington, D.C. The streets and sidewalks are wide. They are
clean. Retail stores and places to eat are tucked inside office
buildings. You can actually drive.

On Friday I walked around downtown Omaha before the Berkshire
shopping day opened. I wasn't wearing any meeting credentials or
anything that obviously identified me as a shareholder. Or so I
thought.

I'm standing at the corner of 10th and Dodge in downtown Omaha,
and a man driving a pickup truck with a trailer full of
lawnmowers pulls up next to me.

"Insurance is a Ponzi scheme," he yells.

I look at him and sort of shake my head, put my hands up, like,
I don't know what to say.

"Warren Buffett is running a Ponzi scheme, that motherf-----."
The light turns and he drives off. He knew what I was here for.
Maybe because no one really walks in this part of town, or maybe
I give away more than I'll ever know. Either way, I am an
outsider.

I have to return my rental car two hours before my flight, and I
sit at a bar to kill time. I tell the bartender, Omaha born and
bred, this story, and she says he just knew. Most people in Omaha
know.

She tells me the obnoxious out-of-towners who enter Omaha and
expect it to be something grand because — well, if it's good
enough for Warren Buffett it must be fabulous — just don't get
it.

At a coffee shop I strike up a conversation with a rickshaw
driver from Council Bluffs, Iowa, just across the Missouri River
from Omaha. He tells me he doesn't work this weekend because in
his seven years doing it, the two times he rode during the
meeting were the worst-tipped weekends he's ever had.

When the world descends on Washington or New York or London or
Shanghai for an event, it's not at all obvious that something
else is going on. But when 40,000 people — which, all
things considered, isn't that many — come to Omaha for
three days to hear and see Warren Buffett and celebrate Berkshire
Hathaway, the city's energy is sort of off-kilter.

I get talking to the rickshaw driver from Council Bluffs because
he sees me wearing my "Invest in Yourself" 5K T-shirt. He
chortles at me, at the event, at the shareholders, at the
company, which leads us to chat for 45 minutes. Of course it
could've gone another way. He would not have cared.

Back at the airport, my bartender, Sue (not her real name), tells
me about the Sunday night she decided not to take her dogs on
their normal walk because it was too hot. They're Chihuahuas —
going out in the yard to take care of their business on a hot
July night is enough.

Instagram

On her normal loop in the Dundee neighborhood of Omaha, there's
an ice-cream shop,
eCreamery, she passes on her usual dog-walking loop. When she
decided not to go out, the famous selfie with Warren Buffett and
Paul McCartney sitting on a bench was taken.

So it goes.

The next night, the line was out the door. "Everyone had to go
eat the ice cream that Warren was eating," Sue said. As if he
would come back a second night in a row.

Buffett likes Omaha, Sue tells me, because he can go about his
business and not really be bothered. He can sit on a park bench a
few blocks from his house and have ice cream with Paul McCartney.
Moreover, there is an ice-cream shop a few block from his house.
He's not secluded in the woods but on a street corner, his front
door less than 60 feet from the sidewalk.

All the folks who went back the second night, either to eat the
same ice cream as Buffett or to hope to find him there again are
missing the point, Sue says. He lives in Omaha because it has
what he likes and people let him be, she tells me. He could live
anywhere, but he chooses to live here. "He's the real deal," she
says.

When Sue's children were young, she brought them to a corner
store down the street where apparently Buffett likes to have
lunch. This was almost 20 years ago, and things have changed, but
Buffett was still a giant in Omaha by then. Her daughter, who was
5 or 6 at the time, wanted to sit on a spinning stool at the
counter, but with Mom trying to corral her younger brother into a
booth, that just wasn't going to happen. An old man seated at the
counter turned around and said he would love to have lunch with
the little girl.

That man of course was Warren Buffett.

So they sat and ate, as Sue tells it, with her daughter talking
Buffett's ear off for a half hour. On his way out he brought her
daughter back to the table and said it was a pleasure, adding
that he was there every Wednesday: He'd love to have company.

They never went back, or at least never ran into Buffett at that
corner store again, which is the moral of the story. Like any
pleasant stranger, he's in and out, here and there, another old
man in a quiet Midwestern city. This is the last conversation I have in
Omaha.

Buffett's front door in
Omaha.Myles Udland/Business
Insider

Buffett lives in Omaha, seemingly hiding from the outside world
precisely because he doesn't have to hide. Shareholders descend
on the city once a year to get a glimpse of Buffett. They pack
the convention center and Borsheim's, the Omaha jewelry store
that Berkshire Hathaway owns, and Gorat's, Buffett's favorite
steakhouse in Omaha. He makes himself seen, makes himself heard,
and then the weekend is over.